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Steven Madden, Ltd. PESTEL analysis is a strategic tool to analyze the macro environment of the organization. PESTEL stands for - Political, Economic, Social, Technological, Environmental & Legal factors that impact the macro environment of Steven Madden, Ltd..
Changes in the macro-environment factors can have a direct impact on not only the Steven Madden, Ltd. but also can impact other players in the Textile - Apparel Footwear & Accessories. The macro-environment factors can impact the
Porter Five Forces
that shape strategy and competitive landscape. They can impact individual firm’s competitive advantage or overall profitability levels of the Consumer Goods industry.
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PESTEL analysis provides great detail about operating challenges Steven Madden, Ltd. will face in prevalent macro environment other than competitive forces. For example an Industry may be highly profitable with a strong growth trajectory but it won't be any good for Steven Madden, Ltd. if it is situated in unstable political environment.
Spanish oil giant Repsol had to face a similar instance. It started an above average profitability operations in Argentina and made strong returns in 5-7 years. But the business was later expropriated by the Left Wing government. So the decade long profits didn’t materialize in the end.
Political factors play a significant role in determining the factors that can impact Steven Madden, Ltd.'s long term profitability in a certain country or market. Steven Madden, Ltd. is operating in Textile - Apparel Footwear & Accessories in more than dozen countries and expose itself to different types of political environment and political system risks. The achieve success in such a dynamic Textile - Apparel Footwear & Accessories industry across various countries is to diversify the systematic risks of political environment. Steven Madden, Ltd. can closely analyze the following factors before entering or investing in a certain market-
The Macro environment factors such as – inflation rate, savings rate, interest rate, foreign exchange rate and economic cycle determine the aggregate demand and aggregate investment in an economy. While micro environment factors such as competition norms impact the competitive advantage of the firm. Steven Madden, Ltd. can use country’s economic factor such as growth rate, inflation & industry’s economic indicators such as Textile - Apparel Footwear & Accessories industry growth rate, consumer spending etc to forecast the growth trajectory of not only --sectoryname-- sector but also that of the organization. Economic factors that Steven Madden, Ltd. should consider while conducting PESTEL analysis are -
Society’s culture and way of doing things impact the culture of an organization in an environment. Shared beliefs and attitudes of the population play a great role in how marketers at Steven Madden, Ltd. will understand the customers of a given market and how they design the marketing message for Textile - Apparel Footwear & Accessories industry consumers. Social factors that leadership of Steven Madden, Ltd. should analyze for PESTEL analysis are -
Technology is fast disrupting various industries across the board. Transportation industry is a good case to illustrate this point. Over the last 5 years the industry has been transforming really fast, not even giving chance to the established players to cope with the changes. Taxi industry is now dominated by players like Uber and Lyft. Car industry is fast moving toward automation led by technology firm such as Google & manufacturing is disrupted by Tesla, which has stated an electronic car revolution.
A firm should not only do technological analysis of the industry but also the speed at which technology disrupts that industry. Slow speed will give more time while fast speed of technological disruption may give a firm little time to cope and be profitable. Technology analysis involves understanding the following impacts -
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Different markets have different norms or environmental standards which can impact the profitability of an organization in those markets. Even within a country often states can have different environmental laws and liability laws. For example in United States – Texas and Florida have different liability clauses in case of mishaps or environmental disaster. Similarly a lot of European countries give healthy tax breaks to companies that operate in the renewable sector.
Before entering new markets or starting a new business in existing market the firm should carefully evaluate the environmental standards that are required to operate in those markets. Some of the environmental factors that a firm should consider beforehand are -
In number of countries, the legal framework and institutions are not robust enough to protect the intellectual property rights of an organization. A firm should carefully evaluate before entering such markets as it can lead to theft of organization’s secret sauce thus the overall competitive edge. Some of the legal factors that Steven Madden, Ltd. leadership should consider while entering a new market are -